Mumbai: Private sector lender IndusInd Bank on Monday reported a net profit of ₹301.84 crore for the three months to March, down 16% on a year-on-year (y-o-y) basis, owing to rise in provisions.
The bank’s total provisions rose 56% y-o-y to ₹2,440 crore in the March quarter. Its profits were lower than ₹412.8 crore estimated by a Bloomberg poll of 13 analysts.
Its net interest income or the difference between interest earned and expended stood at ₹3,231.19 crore, up 44.74% from the same period last year. IndusInd Bank’s net interest margin (NIM), a measure of its profitability, was at 4.25% in Q4FY20, up 10 basis points (bps) from Q3 FY20 and up 66 bps from Q4 of the previous financial year.
On a call with reporters, Sumant Kathpalia, the newly-appointed chief executive, said that the bank has done an analysis of the covid-19 situation and a full portfolio analysis on the corporate and retail side of its businesses.
“We have taken different scenarios. For a mild-to-moderate scenario, we have taken that 50% of the country opens up around mid-May or the third week of May, the balance 25% opens up between the first and second weeks of June and the balance 25% in the first week of July," said Kathpalia.
In such a scenario, the bank will not see more than 80 bps increase in its gross non-performing assets (NPA) and 50 bps in credit cost because.
The bank’s gross bad loan ratio, or its bad loans expressed as a percentage of total loans, increased 35 bps on a y-o-y basis to 2.45% in Q4FY20. However, the net bad loan ratio was lower by 30 bps y-o-y owing to an increase in provisions. Its provision coverage ratio (PCR) increased to 63.34% in March, 2020 from 43.04% in March 2019.
IndusInd Bank said in a statement that there is a high level of uncertainty about the duration of the lockdown and the time required for things to get normal. In this backdrop, on the basis of an internal assessment, the bank has made a counter cyclical buffer or floating provision of ₹260 crore.
That apart, it has also set aside ₹23 crore during the quarter on account of the three-month moratorium offered to borrowers. The RBI has mandated banks to make provisions for 10% of the outstanding loan on moratorium in two tranches of 5% each in the March and June quarter.
“On the retail side, in March the collections were upwards of 95% in all our portfolios and in the month of April we are educating our clients to get the installments in and we are seeing very, very healthy results in April also. Clients are willing to pay because they understand that they will have to pay extra interest on the portfolio," said Kathpalia.
Kathpalia added that the bank has reached out to its corporate clients. “We are seeing very few clients come back to us. It’s early days and we still have to watch," he said.
The private sector lender’s total advances were at ₹2.06 trillion, up 10.94% from 31 March, 2019 and its deposits stood at ₹2.02 trillion in Q4 FY20, up 3.67% y-o-y.
“Any prediction on loan growth right now will be incorrect. I somehow think all of us are in this situation of perfecting our balance sheet and making sure that our collections are on track and our portfolio remains as an asset and we are not seeing any high delinquency," said Kathpalia.
On Monday, shares of IndusInd Bank gained 6.33% to close at ₹407.35 per share, while the benchmark Sensex index gained 1.33% to close at 31,743.08 points.
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